2013 Legislature: It's the DFL's show, so what will they do?

Throughout the 2012 campaign, Gov. Mark Dayton promised Minnesota voters he would end the gridlock in St. Paul and put the state on a path to fiscal stability and job growth if they would just give him Democratic-Farmer-Labor majorities in the House and Senate.

"It's gridlock versus progress," Dayton said of the choice between a Legislature controlled by Republicans, as it was during his first two years as governor, or one run by his fellow DFLers.

Voters granted his wish. DFLers will control both houses when the 2013 Legislature convenes Tuesday, Jan. 8, marking the first session with undivided Democratic control of state government since 1990.

They will be under pressure to keep promises many of them made to overhaul taxes, create more good jobs and improve Minnesota's schools.

They also created voter expectations that they would "get things done." Many campaigned on a pledge to end the bickering at the Capitol and work together to fix the state's problems.

Their first task will be to plug a projected $1.1 billion hole in the next two-year budget. That won't be easy. But after making spending reductions to close a $5 billion budget gap in 2011, lawmakers will be harder pressed to find fat to trim.

In addition, they will try to start repaying the remaining $1.1 billion the state borrowed from schools to balance previous budgets, while pumping even more money into education and holding down property taxes.

They also face a pent-up demand from interest groups for more spending on health care, roads and bridges, trains and buses, and government building projects.

Advertisement

Other organizations will push for legalizing same-sex marriage and implementing stricter gun-control laws.

Incoming Senate Majority Leader Tom Bakk, DFL-Cook, warned those groups to "restrain themselves." Legislators, he said, must balance the budget before they look at new spending requests or delve into social issues.

Here's a look at some of the issues facing the Legislature:

TAXES

Dayton and DFL legislative leaders say Minnesota's tax system is broken, and they hope to fix it with what could be the biggest overhaul in decades.

The governor says he plans to propose changes to make the tax system simpler and fairer, encourage economic growth and provide stabler revenue sources in order to get state government off the roller coaster that has resulted in eight budget deficits in the past 12 years.

The new leaders of the House and Senate DFL majorities share his goal, but they acknowledge it won't be easy. Tax changes produce winners and losers, and potential losers will fight plans that increase their taxes.

While he hasn't released details, Dayton has said he wants to provide property tax relief, lower a corporate income tax rate that is the third-highest in the nation and reduce the sales tax rate.

He could do that by eliminating some corporate and individual income tax breaks, broadening the sales tax base to include more consumer services and keeping a 2010 campaign promise to increase income taxes for the highest-earning 2 percent of taxpayers. He also wants to require Internet retailers to collect state sales taxes, eliminating their advantage over in-state retailers that currently collect those taxes.

Republican leaders have warned that the DFL proposals will mean tax increases. As the state continues to slowly emerge from the Great Recession, "this is not the time to raise taxes," said incoming House Minority Leader Kurt Daudt, R-Crown.

EDUCATION

Advocates for Minnesota's littlest minds and adult learners are lining up for more money as well.

Debate on overhauling Minnesota's tax system will be paired with discussions about changing how schools are funded so it's simpler and more balanced for schools around the state.

A working group has a plan that would cost the state an extra $634 million a year -- a 7 percent increase in funding for preschools through high schools. Supporters say it can be phased in over four to six years.

And advocates for early-childhood education want $150 million more a year to help disadvantaged preschoolers.

Business leaders will focus on performance goals for the state's two higher-education systems to make sure they're better aligned with the state's K-12 system, more affordable and producing graduates with the skills needed to compete in a global economy.

Minnesota State Colleges and Universities are asking for $97 million more over two years, with promises to cut administration costs and cap tuition increases at 3 percent. The University of Minnesota wants an additional $91.6 million over the biennium, tying the increase to an undergraduate tuition freeze and setting performance goals for some funding.

GUN CONTROL

After a mass shooting at a Connecticut elementary school that killed 26 people, expect legislators to take a closer look at gun laws.

The incoming heads of the House and Senate public safety panels have said an examination of tightening gun codes is only appropriate, whether it is plugging loopholes that allow people to buy firearms at gun shows without background checks or tougher screenings for gun owners.

One Republican legislator has also suggested allowing teachers to arm themselves in the classroom. And the National Rifle Association called for every school to have an armed officer or guard. Both proposals are unlikely to gain traction in the DFL-controlled Legislature, given opposition from law enforcement and educators.

PUBLIC SAFETY

State lawmakers also will need to look at a program for Minnesota's most dangerous sex offenders. A task force last month recommended the Legislature create a network of regional treatment facilities rather than housing all 669 civilly committed sex offenders at the state's high-security treatment center in Moose Lake.

Minnesota has yet to treat and fully discharge a sex offender from the program in two decades, leaving it vulnerable to legal challenges like a class-action lawsuit filed by several sex offenders last summer.

The program is also expensive, costing about $120,000 per patient -- three times higher than the average prison inmate cost.

And expect legislation requiring all state crime labs to be accredited. The move comes months after top prosecutors in three metro counties asked the state to retest evidence in hundreds of drug cases in which the troubled St. Paul crime lab was initially used to process evidence.

Experts and crime lab workers testified, starting last summer, about substandard work spanning years at the unaccredited crime lab.

State Sen. Scott Dibble of Minneapolis will take the lead on a bill to legalize gay marriage, but the incoming leaders of the Senate and House DFL majorities have preached patience on the issue, citing the state budget as first priority and saying Minnesotans need more time for conversation about marriage.

Dayton supports legalizing gay marriage but has taken a similar go-slow approach. He says he will renew his push to include benefits for same-sex partners in future state employee contracts.

The U.S. Supreme Court recently announced it will hear two gay marriage cases, which could have implications for Minnesota and other states.

Despite the go-slow message from DFL leaders, Minnesotans United for All Families, the organization that led the campaign against the defeated marriage amendment to the state constitution in the November election, announced last month that it will push for legal gay marriage. Dibble, who is gay, said they would wait about a month before introducing a bill to allow economic issues to be heard first.

ENVIRONMENT

"Frac sand mining is going to be huge" as an environmental issue, Dayton said last month.

Southeastern Minnesota is loaded with silica sand, the mineral used in hydraulic fracturing to extract oil and natural gas from underground rock in other parts of the country.

Frac sand mining could boost that region's economy, but lawmakers will likely analyze its impact on truck traffic, groundwater and property values. Dayton hopes to propose a package of legislation to deal with those issues.

HEALTH CARE

With the Legislature expected to focus on balancing the budget, insurers, doctors and hospitals are bracing for cuts in state spending on health and human services.

Health care is one of the fastest-growing parts of the budget and has been a target for cuts at the Capitol for several years, said Sen. Tony Lourey, DFL-Kerrick, who will chair the Senate Health and Human Service Committee.

Lourey wants to push back against the trend, saying cuts are getting "increasingly difficult" for the health and human services budget to take.

The state's largest health program is Medicaid, which is jointly funded by the federal government to cover long-term-care costs and provide health insurance for low-income and disabled Minnesotans.

While searching for savings in the health care budget, legislators also will face calls for the state government to do more.

Legislators this session will debate whether to expand Minnesota's Medicaid program -- called Medical Assistance -- to thousands more residents. The expansion is made possible by the federal Affordable Care Act, which Congress passed in 2010 to overhaul the nation's health care system.

The health law calls for the creation of state-level health insurance exchanges, where individuals and small employers can begin buying coverage in late 2013. The Dayton administration has been developing plans for Minnesota's own exchange -- rather than adopting a federal model -- but the Legislature has yet to pass a bill on the subject.

Many lower- and middle-income people will receive federal subsidies to buy coverage on health exchanges. As a result, one question before the Legislature is whether to continue the MinnesotaCare program, which the state created in 1992 to provide access to health insurance to lower-income Minnesotans in jobs that lacked benefits. Some want the state to create a new program called a "Basic Health Program" for current MinnesotaCare beneficiaries.

BONDING

The Legislature traditionally passes relatively modest public works funding bills in odd-numbered "budget" years, averaging around $140 million over the last 10 years in such years as this one; and larger bills -- $775 million on average -- in even-numbered "bonding" years.

But this year, Dayton and at least some legislative leaders want to pass a big construction package, called a bonding bill because it borrows money through the sale of general obligation bonds. The state could borrow up to $1.3 billion under current guidelines, but lawmakers would have to find extra cash to pay the debt service, and no one has yet put a price tag on a proposal.

Last year, lawmakers made a $44 million down payment toward restoring the deteriorating state Capitol, and Dayton wants to finish the project, which would cost about $100 million in each of the next two years. He also wants to fund civic center projects in Mankato, Rochester and St. Cloud with about $60 million in state subsidies.

House Capital Investment Committee Chair Alice Hausman, DFL-St. Paul, supports those proposals but said the greatest need is to clear up a backlog of "asset preservation" projects to repair and maintain facilities the state already has. They include college buildings, parks, trails and wastewater-treatment plants. She also favors expanding transit systems.

"We're guaranteed better prices if we do it now," Hausman said. The interest rate on the last bonds the state sold was 2.05 percent -- the lowest rate she recalls -- "and we ought to take advantage of that." Moreover, she said, a bonding bill would create much-needed construction jobs.

DFLers will need Republican help to pass a bonding bill. A 60 percent "super majority" is required to increase the state's debt, so the DFL will need at least two GOP votes in the Senate and eight in the House.

TRANSPORTATION

Last fall, a transportation task force appointed by Dayton called for a 40-cent-per-gallon gas tax increase and increases in other fees to raise at least $50 billion for roads, bridges and transit over the next 20 years.

Faced with a budget deficit and committed to overhauling other state taxes, the governor hasn't endorsed those recommendations. But he said the report puts Minnesota's transportation needs on the radar screen.

Lawmakers will take a hard look at finding ways to pay for moving us around, predicted Dibble, the new Senate Transportation Finance Committee chair. "The (task force) made a solid argument that other regions are ahead of us in terms of building economically competitive transit and transportation systems. If we're going to keep up, we have to do something."

In the past, it has taken broad coalitions of urban, suburban and rural lawmakers plus business organizations, labor unions and local elected officials to pass bills providing more transportation revenue. Such a coalition isn't evident yet, but Dibble said support is building.

CAMPAIGNS AND ELECTIONS

With DFLers controlling both houses, they could ram through changes that give them an edge in future elections. But DFL leaders say that won't happen.

Dayton said he will demand broad bipartisan support before he signs any election law changes, and the new leaders with jurisdiction over such laws pledge to abide by his demand.

Nonetheless, they have long lists of possible changes to campaign and election statutes.

After some voters had to stand in line for three to four hours to cast ballots on Election Day, they will consider "some form of early voting," said Assistant Senate Majority Leader Katie Sieben, DFL-Newport, who chairs that chamber's Elections Division.

House Elections Committee Chair Steve Simon, DFL-St. Louis Park, said the options include creating an early voting period or allowing voters to cast absentee ballots "for any or no reason at all."

Outside interest groups outspent legislative candidates in many districts last fall, and Sieben and Simon both support raising candidates' campaign contribution and spending limits in order to, in Simon's words, "give them a megaphone that more closely approaches the size of the ones that outside groups have."

They will consider "electronic poll books" as an alternative to the Republican-backed photo ID requirement that voters rejected last fall. Poll books could match voters to photos already in the state's driver's license system or take new photos at polling places.

Other potential changes include moving primary elections to June, requiring lawmakers to disclose more information about their sources of income to reveal conflicts of interest, allowing online voter registration, enacting new ways to replace candidates on the ballot who die or resign, awarding Minnesota's electoral votes to the presidential candidate who wins the most popular votes in all 50 states and raising the threshold for putting constitutional amendments on the ballot.

PUBLIC PENSIONS

The Public Employees Retirement Association (PERA) is expected to ask legislators for changes to the pension fund for police officers and firefighters in order to stabilize the troubled plan. Proposals include contribution increases from employee paychecks and the local governments that they work for, increased penalties for retiring early, reductions in cost-of-living increases for retirees, vesting changes for new hires and a benefits cap for new hires.

The Minnesota State Retirement System (MSRS), a pension fund that covers state government employees, plans to ask the Legislature to increase contributions to its judges' pension plan, lower the benefit formula and set lower cost-of-living increases for retirees until the fund's financial picture improves. A proposal for changes to the State Patrol plan is also possible. At its Jan. 17 meeting, the MSRS board of trustees will decide whether to ask the Legislature to increase contributions, raise penalties for early retirement and reduce cost-of-living increases for retirees.